Half Yearly Report

RNS Number : 0049X

Creightons PLC

30 November 2010

 

 Creightons plc Group

Interim financial report

For the six months ended 30 September 2010

 

Chairman’s Statement

 

I am pleased to report to you that for the first time in many years the Group has recorded a modest profit in the first six months to 30 September 2010. This has been brought about to a large extent by a change in emphasis with greater focus on our own brands such as The Real Shaving Company, Twisted Sista and Bronze Ambition. The retained profit of £2,000 is an improvement of £118,000 on the previous year’s loss of £116,000 in the six months to 30 September 2009.  In the past few years the Group has usually traded at a loss in the first half of the year and a recorded a profit in the second half of the year. However the improved sales in the first half of the year and a significant reduction in seasonal gift business means that the historically cyclical nature of our business will be much lower in the current year. The lower sales in the second half of the year will adversely impact on the full year profits compared to last year.

 

Group sales in the first six months of the year increased by £1,136,000 (20%) to £6,811,000 (2009 - £5,675,000) compared with the same period last year. Whilst overall sales of private label products have increased in the period, sales of seasonal private label gift products have fallen. Sales of seasonal private label gift products will be much lower in the second half of the year. As a result of our greater focus on branded products, we have continued to expand our sales of these products which now account for 30% of sales in the period as against 28% in the prior period. We have continued to consolidate the presence of our brands in the North American market as we have continued to increase our customer base. We have appointed new sales agents and are confident that this will further improve our presence in North America as we continue to drive sales growth based on a consumer focused marketing strategy.

 

Our gross margins have improved by 1.1% compared to the same period last year in the main due to ongoing work to improve labour and material costs and the increased proportion of sales from branded products. This highly creditable margin improvement has been achieved against a background of falling selling prices and continued pressure on raw material cost prices and through exchange rate volatility. In addition, distribution costs have risen faster than sales in part due to increased freight costs and the lower average retail selling price of products despatched in the period.

 

We have increased our sales resources and promotional expenditure to facilitate the ongoing drive to expand our sales of branded products which has increased overheads, albeit at a lower rate than the resultant growth in sales. We will continue to review our overhead structure to ensure it matches revenue projections and new product launch opportunities from new and existing customers.

 

Whilst we continue to be cautious regarding the underlying level of retail sales, particularly in the current environment, we believe our strategy of developing strong value driven product will help counteract this uncertainty and is enabling us to build a more robust branded product franchise.

 

To this end, the Group has acquired a 55% stake in the Twisted Sista hair care brand which is showing strong growth potential in the UK and more especially in North America. This investment will enable us to benefit from the associated brand equity which we believe has considerable potential. A major launch of the Twisted Sista brand with significant advertising and promotional support is planned for the spring of 2011 and while the launch costs will impact on the profitability in the period we should see the benefit in underlying sales in the following years.

 

Our continued policy of strengthening the company’s balance sheet and retaining earnings has resulted in reduced  borrowings in the first half of the year and a lower interest cost of £7,000 (2009: £12,000).

 

I believe that this half year’s pre-tax profit at £2,000 (2009: loss of £116,000) is a strong performance in the current economic climate and the change in the business mix away from seasonally biased business and to increase sales of branded products significantly strengthens the business fundamentals and puts us in a strong position to take advantage of future improvements in economic conditions. 

 

 

 

 

W O McIlroy

Executive Chairman                                                                                                                     29 November 2010

 

 

Responsibility statement

 

We confirm that to the best of our knowledge:

a)      The condensed set of financial statements has been prepared in accordance with IAS 34:

b)      The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year; and

c)The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of material related party transactions and changes therein).

 

By order of the Board

 

 

 

 

Nicholas O’Shea

Company Secretary and Director

 

 

 

 

Consolidated income statement – unaudited

 

 

		Six months ended 30 September		Year ended 31 March
		2010	2009	2010
	Note	£000	£000	£000
Revenue		6,811	5,675	13,590
Cost of sales		(3,954)	(3,379)	(7,837)
Gross profit		2,857	2,296	5,753
Distribution costs		(294)	(230)	(511)
Administration costs		(2,554)	(2,170)	(4,908)
Profit/(loss) from operations		9	(104)	334
Finance costs		(7)	(12)	(31)
Profit/(loss) before tax		2	(116)	303
Tax		-	-	-
Profit/(loss) for the period attributable to the equity holders of the parent company		2	(116)	303

 

Earnings per share

 

Basic	2	0.004p	(0.21p)	0.56p
Diluted	2	0.003p	(0.19p)	0.51p

 

 

 

 

Consolidated statement of comprehensive income

 

 

		Six months ended 30 September		Year ended 31 March
		2010	2009	2010
		£000	£000	£000
Profit/ (loss) for the period from continuing operations		2	(116)	303
Exchange differences on translating of foreign operations		21	40	18
Movement on cash flow hedges taken to equity		-	(143)	-
Release of cash flow hedge to income statement		-	-	(179)
Total recognised income and expense for the period attributable to the equity holders of the parent company		23	(219)	142

 

 

Consolidated balance sheet – unaudited

 

 

		30 September		31 March
		2010	2009	2010
		£000	£000	£000
Non-current assets
Goodwill		343	331	331
Other intangible assets		141	155	154
Property, plant and equipment		362	398	394
		846	884	879
Current assets
Inventories		3,161	3,690	2,770
Trade and other receivables		2,789	2,329	2,013
Cash and cash equivalents		43	27	49
Derivative financial instruments		-	36	-
		5,993	6,082	4,832
Total assets		6,839	6,966	5,711
Current liabilities
Trade and other payables		2,346	1,959	1,822
Obligations under finance leases		13	14	16
Short term borrowings		803	1,690	216
		3,162	3,663	2,054
Net current assets		2,831	2,419	2,778
Non-current liabilities
Long term borrowings		2	17	7
		2	17	7
Total liabilities		3,164	3,680	2,061
Net assets		3675	3,286	3,650
Equity
Share capital		543	543	543
Share premium account		1,229	1,229	1,229
Other reserves		38	38	38
Share-based payment reserve		71	66	69
Retained earnings		1,826	1,405	1,824
Hedging reserve		-	36	-
Translation reserve		(32)	(31)	(53)
Total equity available to the holders of the parent company		3,675	3,286	3,650

 

 

 

Statement of changes in shareholders equity – unaudited

 

 

	Share capital	Share premium	Other reserves	Share-based payment reserve	Retained earnings	Hedging reserve	Translation reserve	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Balance at 1 April 2009	543	1,229	38	63	1,521	179	(71)	3,502
Loss for six months ended 30 September 200	-	-	-	-	(116)	-	-	(116)
Debit to equity for share based payments	-	-	-	3	-	-	-	3
Transfer to Income	-	-	-	-	-	(143)	-	(143)
Exchange differences on translation of foreign operations	-	-	-	-	-	-	40	40
Balance at 30 September 2009	543	1,229	38	66	1,405	36	(31)	3,286
Profit for six months ended 31 March 2010	-	-	-	-	419	-	-	419
Debit to equity for share based payments	-	-	-	3	-	-	-	3
Transfer to Income	-	-	-	-	-	(36)	-	(36)
Exchange differences on translation of foreign operations	-	-	-	-	-	-	(22)	(22)
Balance at 31 March 2010	543	1,229	38	69	1,824	-	(53)	3,650
Profit for six months ended 30 September 2010	-	-	-	-	2			2
Debit to equity for share based payments	-	-	-	2	-	-	-	2
Exchange differences on translation of foreign operations	-	-	-	-	-	-	21	21
Balance at 30 September 2010	543	1,229	38	71	1,826	-	(32)	3,675

 

 

 

Consolidated cash flow statement – unaudited

 

 

		Six months ended 30 September		Year ended 31 March
		2010	2009	2010
		£000	£000	£000
Net cash (outflow)/inflow from operating activities		(482)	(1,500)	151
Cash flow from investing activities
Purchase of property, plant and equipment		(25)	(21)	(77)
Goodwill		(12)	-	-
Expenditure on intangible assets		(62)	(91)	(182)
Net cash used in investing activities		(99)	(112)	(259)
Cash flow from financing activities
Repayment of finance lease obligations		(8)	(7)	(15)
Increase/(decrease) in bank overdrafts		586	1,456	(18)
Net cash from/(used in) financing activities		578	1,449	(33)
Net (decrease)/increase in cash and cash equivalents		(3)	(163)	(141)
Cash and cash equivalents at start of period		49	194	194
Effect of foreign exchange rate changes		(3)	(4)	(4)
Cash and cash equivalents at end of period		43	27	49

 

 

Notes to the interim financial report

 

1.                              Basis of preparation

 

The condensed financial statements in this Interim Report have been prepared in accordance with the requirements of IAS 34 ‘Interim Financial Reporting’ as adopted by the European Union.

 

As required by the Disclosure and Transparency Rules of the UK’s Financial Services Authority, the condensed set of financial statements has been prepared by applying the accounting policies and presentation that were applied in the preparation on the Company’s published consolidated financial statements for the year ended 31 March 2010, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

The condensed interim financial statements for the six months ended 30 September 2010 and the comparative figures for the six months ended 30 September 2009 are unaudited and have not been reviewed by the Auditors.   The summary financial statements for the year ended 31 March 2010 represent an abbreviated version of the Group’s full financial statements for that year, on which the Auditors issued an unqualified audit report and which have been filed with the Registrar of Companies.

 

2.                              Earnings per share

 

The calculation of the basic and diluted earnings per share is based on the following data:

 

 

		Six months ended 30 September		Year ended 31 March
		2010	2009	2010
		£000	£000	£000
Earnings
Net profit/(loss) attributable to the equity holders of the parent company		2	(116)	303

 

		Six months ended 30 September		Year ended 31 March
		2010	2009	2010
		Number	Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share		54,275,876	54,275,876	54,275,876
Effect of dilutive potential ordinary shares relating to Share options		5,426,550	5,426,550	5,426,550
Weighted average number of ordinary shares for the purposes of diluted earnings per share		59,702,426	59,702,426	59,702,426

 

 

 

3.         Related party transactions

 

The related party transactions that occurred in the six months ended 30 September 2010 are not materially different in size or nature to those reported in the Company’s Annual Report for the year ended 31 March 2010.

4.         Availability of Interim Report

 

The Interim Report is being sent to shareholders. Further copies can be obtained from the Company's Registered Office, 1210 Lincoln Road, Peterborough, PE4 6ND.

 

 

 

 

END

 

 

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